Keep it Real, not Rosy
3 takeaways from my conversation with Alden Zecha, Managing Director of SideCar Angels.
We really like seeing documentation that says, "Hey, here are the pros and cons of this deal. Here are the opportunities and the risks." We don't want everything to be perfectly rosy because we recognize that's not reality.
Today, I’m breaking down 3 takeaways from my discussion with Alden Zecha, Managing Director at SideCar Angels.
Check out our full conversation + how to connect with Alden here.
The Observer Express
Don’t have time to read the entire post right now? No worries, here are today’s 3 takeaways:
How to DD DD: Ask “Who Wrote this and WHY?” This fundamentally informs the way the analysis should be processed.
The 4 Pillars of an Angel Group: Admin, Deal Flow, Member Relationships, & Community Engagement. Typically, these are smashed together in 1-2 people, but if given the opportunity to delegate, that’s how Alden would do it.
Geography Still Matters. Based in SF? Raise from SF VCs, then go elsewhere. Otherwise, investors may have questions.
1. How to DD DD: Ask “Who Wrote this and WHY?”
This was my favorite point from the entire interview. It’s so easy to get caught up in the details of a deal, but Alden’s first reaction to any DD material is to ask “Who wrote this thing and WHY?” The answer to that question fundamentally informs and contextualizes the entire report.
Who is this VC relative to this business? For example, if you've got a VC that dominantly invests in SaaS software, and now they're looking at an industrial manufacturing business, to me, I'd be like, there's something wrong here. Why is this VC looking at that?
Who is the VC?
What’s their Thesis?
What is their goal?
If the lead investor is a government economic development agency whose primary role might be economic stimulus in their city or state, maybe it's job creation. They're not necessarily looking at return on investment. They're not necessarily looking at what's an exit in the future because they're looking at ‘How do I get jobs created? How do I get keep money moving around my economy?’
Basically, it comes down to, do I trust the diligence materials are written with the viewpoint that aligns with my viewpoint. And if they don't, that doesn't mean ignore those materials, but it does mean as you read them, understand that the view is different.
2. The 4 Pillars of an Angel Group: Admin, Deal Flow, Member Relationships, & Community Engagement.
In my experience, most angel communities have 1-2 leaders who handle most of the actual work. They each wear “multiple hats”. But in a world where an investor community happens to have 4 leaders available, here’s how Alden would break down those responsibilities:
Back Office & Admin: “All the paperwork, where's the money moving, who's moving money. And potentially that person would also be the one handling logistics of meetings, scheduling the meetings, getting emails out to members, and so forth.”
Deal Flow. “Where are deals coming from? They're responsible for getting the top of the funnel filled with potential deals.”
Member Relations. “Getting new members, supporting current members, making sure the members are happy, listening to any improvements that they might suggest, concerns they might have.”
Community + More Admin: “The last person could help in part with the administration, because admin is a lot more than people think in these groups, but I'd also allocate them to working with the broader community. So looking at, for example, relationships with other angel groups, relationships with VCs, relationships with state or local government, tying into accelerators, etc.”
3. Geography Still Matters
In this post-COVID world, the world lies a mere 24 inches from my eyeballs. I tend to basically disregard location since I can meet with anyone anywhere anytime. That mindset may be a mistake, and Alden highlighted a very thoughtful reason why:
For example, if a tech company is coming out of Silicon Valley but the deal lead is out of Florida, that immediately raises some questions and concerns. The question is “If the whole company is based in Silicon Valley, and yet the company had to go to Florida to get the money - why couldn't you get the money from the VCs or the angels down the street?”
So that says to me, did those investors reject that company, in which case, obviously, that's a red flag, or is the company not well networked with their local community?
3 Lessons Learned
Don’t be icky.🤢
I had several meetings with warm introductions this week from trusted friends. A couple of them left me feeling “icky”. Why? My counterparty almost immediately asked me for something, and clearly just wanted to talk about themselves. Give first people, give first.Give. Me. The. Nuggets.🍗
Time is truly the most valuable thing someone can offer. Frontload the good stuff. Seeing this play out over and over again the older I get, and this week was no different. BLUF: Bottom Line Up Front.
Really hard skill to learn: what NOT to delegate.🛠️
Now that we’ve established a growing team, it’s easy (and very tempting) to just chuck things over the fence. After all, I personally represent PitchFact’s sales, marketing, admin, HR, legal, strategy, corporate development, portions of ops, and general “oh we didn’t think about that but somebody has to do it” team. I’m always stressed. But some stuff, the important stuff, really does need to stay on my plate. What’s important? Good question - welcome to my every waking moment.
3 Interesting Links
Impact of AI on sales tech + a pretty good market map from A16Z (link)🤝
Explanation of this “great wealth transfer” thing I keep hearing about (link)👵
We’re living in Star Wars now: some cool stuff happening in outer space (link)🛰️
Tune in next week for a breakdown of my conversation with a seasoned VC with decades of experience supporting fast-growing tech companies.
Until then, thanks for reading - have a great week.
-Andrew
P.S. Your feedback is important to me. If you enjoyed this post, hit the “like” button or leave a comment with your thoughts.
How did I do this week?
About Me
I cultivate flourishing.
I'm also the CEO of PitchFact, where our mission is to cultivate flourishing specifically through efficient and collaborative early-stage diligence. I'm a proud husband, grateful father, and honest friend. My love languages include brisket, bourbon, and espresso.